2007 Legislative Session: Third Session, 38th Parliament

HANSARD

The following electronic version is for informational purposes

only.

The printed version remains the official version.

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

TUESDAY, OCTOBER 23, 2007

Morning Sitting

Volume 23, Number 1

CONTENTS

Routine Proceedings

Page

Committee of the Whole House

Business Practices and Consumer

Protection (Payday Loans) Amendment Act, 2007 (Bill 27)

Hon. J. Les

R. Fleming

Reporting of Bills

Business Practices and Consumer

Protection (Payday Loans) Amendment Act, 2007 (Bill 27)

Third Reading of Bills

Business Practices and Consumer

Protection (Payday Loans) Amendment Act, 2007 (Bill 27)

Committee of the Whole House

Securities Amendment Act, 2007 (Bill

28)

L. Krog

Hon. W. Oppal

[ Page 8723 ]

TUESDAY, OCTOBER 23, 2007

The House met at 10:02 a.m.

[Mr. Speaker in the chair.]

Prayers.

Orders of the Day

Hon. M. de Jong: I call committee stage of Bill 27,

Businesses Practices and Consumer Protection (Payday Loans) Amendment Act, 2007.

[1005]

Committee of the Whole House

BUSINESS PRACTICES AND CONSUMER

PROTECTION (PAYDAY LOANS)

AMENDMENT ACT, 2007

The House in Committee of the Whole (Section

B) on Bill 27; S.

Hammell in the chair.

The committee met at 10:06 a.m.

Sections 1 to 3 inclusive approved.

section 4.

Hon. J. Les: I move the amendment to

section 4 standing in

my name in the orders of the day.

SECTION 4,

by deleting the text shown as struck out and adding

the text shown as underlined:

Payout of balances on cash cards

112.09

(1) If in respect of a payday loan the payday lender

issues a cash card to the borrower, the borrower is entitled to be paid in cash

the amount of the balance of credit remaining on the card in either of the

following circumstances:

(

a) the balance of credit remaining on the cash card is less

than the prescribed amount;

(

b) the payday loan has been repaid by the borrower and the

cash card has expired.

(2) If the borrower is entitled to be paid a balance under

subsection (1) and returns the cash card to the payday lender, the payday lender

must pay the balance immediately on demand by the borrower or by the director.

(3) On return of a cash card under this section, the payday

lender must immediately give the borrower a receipt for the cash card and the

receipt must specify the amount paid to the borrower.

(4) Subject to and in accordance with the regulations, the

balance of credit remaining on an expired cash card issued to a delinquent

borrower may be applied by the payday lender as payment towards the payday loan.

(5) In subsection (5) subsection (4) ,

"delinquent borrower" means a borrower who fails to repay a payday loan

by the end of the payday loan term under the loan agreement.]

Amendment approved.

section 4 as amended.

R. Fleming: I wanted to ask the minister a couple of

questions about how the regulations will be brought into effect in regard to the

charges that are defined in this

section and whether he can outline to me when

this is to become law, how the public will proceed to be able to make known to

the minister and to the branch in the ministry that is charged with enforcement

of this act and with devising regulations, and whether there will be a provision

for public hearings in certain areas of the province — those kinds of things.

Hon. J. Les: Over the period of time that we have been

producing this legislation, there have been very significant amounts of

consultation not only with the public but more specifically with the various

stakeholders in the industry. Once the bill has been passed by the House, we

will be re-engaging in that consultation process with the various stakeholders

in a formal way, given that the bill will then have been passed by the

Legislature.

We will be posting on the website opportunities for people to

respond to specific questions. Once that process is completed, we will be

engaging in meetings — again, open to the public — and with stakeholders to

ensure that they have input in terms of the regulations. Of course, once the

regulations are formulated, they will proceed to cabinet for approval and

implementation.

[1010]

R. Fleming: Just further on that, if I could have the

minister comment on the use of the Business Practices and Consumer Protection

Authority to conduct that public information gathering. Will it then be formal

hearings? Will the meetings be transcribed? Will it be advertised in major

newspapers to the public? Will there be an invitation beyond, I suppose, just

the stakeholders that one can readily see as having an interest in this

legislation? Is there provision for that authority to conduct hearings like that

now, or would this be sort of a special…?

If he were to agree that that was desirable, to have that level of

openness and transparency in gathering public views, is that something that the

authority has the capacity to do at this point in time?

I know the B.C. Utilities Commission, for example, does have

experience with this in setting rates for basic utilities in advance of the

regulations, which are the most important part of this legislation for the

consumer and for the public.

It would be, I think, of extreme benefit for British Columbians to

also have an opportunity to participate in that way.

Hon. J. Les: I just want to be clear here. It will be the

ministry that will lead the consultation process, not the Consumer Protection

Authority. Once the regulations have been formulated and approved by cabinet,

the Consumer Protection Authority will be responsible for implementation.

The consultation process is something that's being done by the

ministry, and it is intended that that be an

[ Page 8724 ]

open consultation process. We are fully aware of a range of stakeholders,

consumer organizations and other interested parties who will want to comment on

the regulations as they proceed. So we want to get all of that input, and it

will be the ministry that will be in charge and responsible for that.

R. Fleming: Could the minister give an indication of what

kind of time line he would suggest would be appropriate for determination of

things like the maximum amount that interest and fees can be and all of the

other things that are major elements of this bill that are to be determined in

regulations?

Could he suggest what period of the remaining calendar year or

into the next year would be required and when those regulations would come into

force?

[1015]

Hon. J. Les: I can assure the member that our objective

here is to try to get this legislation and the regulations implemented as

quickly as we can, but I am sure the member can also appreciate and understand

that this is going to take a bit of time. We need to consult not only with the

industry but with the public and with various stakeholders. It's envisioned that

that will take the balance of this year and the early part of next year. We

would anticipate having the draft regulations completed by the spring of next

year and, hopefully, approved by cabinet.

At that point, of course, we then turn our attention to the

implementation of the legislation and the regulations. Again, I'm sure the

member opposite can anticipate that that will take a significant amount of

adjustment and preparation.

I am somewhat hesitant to speculate on exactly when this bill will

be fully implemented, but in terms of the consultation and regulation

development process, it is our intention and our best guess at this point that

that can be completed by the spring of next year.

R. Fleming: The

section around bringing in licensing

requirements, then — would that be something that would take immediate effect

after this bill comes into effect?

If the minister could just give some comments on how payday

lending institutions will apply for licensing — when that might occur and

whether it will be done on a company basis or on a location-by-location basis

for each entity.

Hon. J. Les: Again, I don't want to downplay what will be a

fairly complex process in terms of getting this legislation in place once it has

been approved by the Legislature, once the regulations have been developed. We

will need to apply to the federal government, for example, for their sign-off.

This is all being done, of course, in the context of the Criminal Code, and this

is actually carved out from the Criminal Code. So that will take some time.

We need to have everything completed and done and ready for

rollout before we can start the licensing process. You can't commence a

licensing process and then still be in the process of developing the regulatory

scenario, for example. All of that has to be completed before we can undertake

licensing.

In response to the member's question about whether we intend to

regulate or license franchise by franchise or location by location, our thinking

is that we will do this location by location.

[1020]

R. Fleming: On the point that the Solicitor General

finished on, I'm glad to hear that. I think that's wise when it comes to

enforcement on a location of a company. Where there are to be violations of the

act, I think that will prove to be in the public interest.

On the licensing issue, though, B.C. is one of a minority of

provinces that has had no licensing regimes specific to this industry. Even with

the uncertainty and the lack of clarity from the federal government on interest

rate laws and how those can be applied to this specific financial product, other

jurisdictions went ahead and had licensing in place.

I wonder if in fact the situation is as the minister has described

or whether, even in the absence of the regulations that will determine what the

loan document looks like and what the maximum fees and charges are, the

government can simply begin immediately to start licensing the industry —

because we will have

definitions of what it is — and whether this consumer

protection act will be amended to have that capacity and whether very simple

things around licensing can begin almost immediately — the background of

applicants, whether they have criminal records and those kinds of things.

That was really where I was going with that question. I wonder if

the minister could comment on whether B.C. could "me too" on the other provinces

that have licensing already in place, although in some cases they don't have

legislation like we do on the actual payday loans themselves.

Hon. J. Les: It's important to know that although some

provinces had a practice of licensing this particular industry, they were in

fact extremely uncomfortable in doing so because before the federal government

provided a carve-out to the Criminal Code, these provinces were almost in the

position of knowingly licensing businesses that were illegally carrying on their

business.

That is why British Columbia actually held back. We didn't want to

almost be complicit in licensing businesses that were illegally conducted. That

is why British Columbia took the lead in consultations at the

federal-provincial-territorial level over the last five years. What we

accomplished out of that was this particular carve-out, giving the provinces

more tools to deal with these industries in the appropriate way.

I think that logic would continue, at least in thinking about it

here. If we were to license them next week, for example, we would be licensing

them in advance of the new regulations being complete and ready to go. Some of

the practices that we disapprove of would still be ongoing, and we would in fact

be licensing those practices.

[1025]

[ Page 8725 ]

My preference is to make sure that we bring the regulations

forward, that we have a regulatory regime ready to go and that we have

legislation with all of the appropriate teeth in it so that we can actually

license people in this industry who should be licensed and presumably also be in

a position to deny licensing to those who should not be carrying on business the

way they are.

R. Fleming: Thank you, in part, for the response. I wonder

if I could maybe get a further comment from the minister on this.

One of the advantages of having a licence is that…. I know the

minister is aware that there are some operators, shall we say, on the margins of

this industry that operate one week under a certain name and can then change the

name of the business very shortly after that.

The spring is still a ways away for this legislation to be

accomplished. There are some abuses that even with the uncertainty around

interest rates and fees not being regulated yet…. In terms of the province being

able to get some compliance from those that are abusing their borrowers in ways

where…. They could be potentially stopped, because their licence would be

revoked if they tried to reincorporate.

I wonder if the minister could comment. That is one of the

advantages in those five provinces I'm aware of that have licensing already,

only one of which has legislation like this. They have that ability to clamp

down on those kinds of operations. If the minister could comment again on just

bringing the licensing into force and whether in fact that could be done in

advance of the regulations being decided.

Hon. J. Les: There was a decision made by the province in

the late '90s, as a matter of fact, to not license this industry because it

would, in effect, condone the practices of the industry. I think that position

is still valid today.

If we were on the very threshold of actually having the

legislation complete and the regulations developed at this point — if we were

going to, at this stage, start the licensing process — I think it would be a

rather costly mistake.

We are, in my view, far better off to be patient for a few more

months and get the legislation to a point where it's effective, where we can

launch it cleanly without any compromise whatsoever so that we can effectively

deal with this industry — properly license those who will be in conformity with

the new legislation and regulations and, frankly, deny licensing to those who

will not comply.

R. Fleming: Then I would ask the minister about when licensing

eventually comes into place — if he could describe a few things about where he

sees the regulations going in that regard. For example, will licences be

transferable or assignable? Will the director of the Business Practices and

Consumer Protection Authority have the power to suspend?

Maybe I'll ask questions as they come. The one that I'm

particularly interested in is whether, as a condition of licensing…. First of

all, what kind of background checks will be done on the individuals applying for

them? Is this in fact a screen so that if there are certain things that the

province becomes aware of, there are conditions in which a licence can be

declined?

[1030]

An additional question in this little group, if that's okay. Will

there be any kinds of bonds or deposits as a condition of licensing, held by the

province, refundable upon that person winding down their business, I suppose,

but also usable in the case of difficulties and orders of compliance, etc.?

Hon. J. Les: In response to the member's question, I would

first of all direct him to the Business Practices and Consumer Protection Act,

which is very much in play in developing this piece of legislation, specifically

part 9 of the act dealing with licences. It sets out the powers of the director

dealing with transferability of licences — for example, that is not permissible

— and all of the other powers of the director.

Also,

part 14 of the act, which deals with the regulations that

can be developed under the act…. If the member consults the Business Practices

and Consumer Protection Act, he will find all of the information that I think he

requires and that he has been asking for with respect to the implementation of

the legislation.

R. Fleming: I appreciate the direction there. I just wonder

if the minister could help me in answering that specific part of the question,

though, of whether a bond or security can be required as a condition of

licensing — a deposit of cash, that kind of thing — and whether that will be the

case for this industry.

[1035]

Hon. J. Les: Again referring to

part 14 of the Business

Practices and Consumer Protection Act, it says, and I'll paraphrase slightly,

that cabinet may make regulations respecting the type of security, the form and

content of security and the circumstances under which the security may be

realized, etc. Clearly, those powers are contemplated in the act, and this will

obviously be part of the regulation-making process that we referred to earlier.

R. Fleming: I think the minister might have to quote the

section for me again, but I just wanted to ask about where a licence is being

applied for and what kind of screening process is in place and under what

conditions, I guess, the director of the authority — I don't think it's the

minister — will be able to deny a licence or revoke a licence. And if the

minister could just comment on what he envisions regulations to be looking for

in that regard — what he would consider unsuitable offences for someone to

conduct business legally in this industry.

J. Brar: I seek leave to make an introduction.

Leave granted.

[ Page 8726 ]

Introductions by Members

J. Brar: Visiting us today in the gallery is a group of

grade 11 social studies students from Tamanawis Secondary School in my riding.

They are here to see this beautiful and historic building and also to observe

the members of this House as they debate the important issues of the people of

British Columbia. These students are also accompanied by their teachers, Ross

Jacobsen and Lindsay Ball. I would urge every member of this House to please

make them feel welcome.

Debate Continued

Hon. J. Les: Again, I would refer the member to

part 9 of

the Business Practices and Consumer Protection Act and specifically

section 146

where it says that the director may refuse to issue or renew a licence or he may

suspend or cancel a licence, etc. It goes on to say that the director may make a

decision under the subsection that I've just quoted if:

"…the applicant or licensee does any of the following: (

a) contravenes this Act or the regulations; (

b) fails to meet or no longer meets

the minimum requirements for a licence as specified in the regulations" — again,

referring to the regulations yet to be developed in this case — "(c)…contravenes

a condition of a licence; (

d) engages in a pattern of conduct that shows, in the

director's opinion, that the person is unfit to have a licence; (

e) is convicted

of an offence under…this Act or any other enactment, or…a law enacted by the

conduct that shows, in the director's opinion, that the person is unfit to have

a licence."

[1040]

So I think we have the legislative tools that we need to give the

director the authority, in conjunction with the regulations that are still in

the making, to ensure that those who should not be licensed in this industry, in

fact, won't be.

R. Fleming: I thank the minister. I think from what he's

just described from the act that, indeed, where there are reasonable grounds to

believe that somebody will not act in an ethical or honest capacity in this

industry, the government will be able to prevent them from successfully getting

a licence. I think that's the assurance we want around this industry.

What was not mentioned in the reasons to deny a licence is in the

case where you may have somebody applying who is actually, personally, through

whatever business, in a stage of bankruptcy proceedings. I wonder if the

minister can give assurances that where somebody is not discharged — bankruptcy

in a business, either in this industry or something else — but the government is

aware that there are proceedings around such a situation, the government could,

in those cases, under the part of the act you've just described, deem that

person unsuitable and not issue them a licence.

Hon. J. Les: Clearly, as the director eventually makes

determinations as to who is or who is not eligible to obtain a licence in this

industry, financial viability has got to be one of the determining factors.

Again, without being too speculative, I would suggest that it pretty much goes

without saying that somebody who is in the process of being an undischarged

bankrupt would not likely be a candidate for licensing in this industry.

R. Fleming: Well, I would hope not too. Obviously, people

who may be in that kind of personal circumstance are not prohibited from going

into all kinds of business. They can take out a loan and open a restaurant or do

all kinds of things and get licensed for it. But I think it's important in a

business where you're lending others money and advancing that that they be

absolutely financially sound and whole and that there be no question about that.

I'm a little concerned. I do indeed hope that those are the kinds

of things that the director will be looking for and will deem to be an automatic

disqualification for getting into this industry.

I wonder if the minister could comment on cases where the licence

applicant is a corporation or a partnership, and whether the director will in

fact review who in a corporation, for example, forms the board of directors and

look into those kinds of backgrounds, or exactly what name will be on the line

in terms of the entity applying for the licence.

[1045]

Hon. J. Les: Again, I should refer here to the Business

Practices and Consumer Protection Act.

Section 199 goes to the concern that the

member has raised where it says the Lieutenant-Governor-in-Council "may make

regulations as follows," and (

a) says clearly: "establishing the qualifications

to be met by an applicant for a licence."

Clearly, that contemplates setting standards and qualifications,

which will be done in regulation, to ensure that we weed out the unsavoury types

who might possibly apply for a licence in this industry.

[1050]

R. Fleming: I just wanted to ask the minister about the

thinking in his ministry around locating enforcement inspection licensing with

the Consumer Protection Authority of B.C. I understand they are responsible for

loan collections and those kinds of industries — debt collection.

There certainly are some other possibilities that could take

responsibility. I know that in other provinces they're using their utility

commissions as the vehicle for bringing this into being and also for creating

the regulatory framework for the industry. Similarly, in B.C. we have the

Financial Institutions Commission.

If the minister could just comment on the range of options and

maybe how they landed on this particular area and this authority.

Hon. J. Les: I appreciate the question. Obviously,

different provinces do things in different ways. We in British Columbia have

decided that the Consumer

[ Page 8727 ]

Protection Authority is the vehicle through which we can best enforce this

particular legislation.

In other provinces it's true…. I think it's Manitoba that uses

their utilities commission, but I believe it's correct to say that they use the

utilities commission there to set the rates. I'm not aware that there's actually

a role there for the utilities commission to enforce the legislation, so that

would be a limiting factor.

The Financial Institutions Commission, again, has a role in terms

of banks, credit unions and very sophisticated lending institutions, but for us,

this was a consumer protection issue. We have the Consumer Protection Authority,

which is independent, at arm's length from government and with a clear mandate

for consumer protection. Armed with this legislation, when it is complete, we

think that they will be in a good position to enforce the legislation and to

effect a strong measure of consumer protection.

I don't think there's any particular magic in locating it in one

place or another place. We have determined, however, that in the British

Columbia context, the Consumer Protection Authority is the right place to put

this to get the maximum amount of consumer protection.

[1055]

R. Fleming: I hope the minister is right. There will be a

great deal of oversight required on this industry, bringing a regulatory

environment into place not just for the benefit of borrowers — although I think

that is the key public interest in having this legislation, because they have

been without redress when they were wronged — but also for the industry to make

appeal, and undoubtedly, they will.

I wonder if the minister could describe for me whether the

Business Practices and Consumer Protection Authority has in place notices and

provisions for allowing licensees to appeal decisions. Can he assure the House

that there are standard practices around notice of doing that and publication of

findings and those kinds of things? I just want to make sure the capacity is

there within this authority to deal with a new industry that it's going to be

charged with giving oversight to.

Hon. J. Les: I just want to be clear here. In terms of the

administration of this act or any other act, the Consumer Protection Authority

adheres to all of the processes of natural justice, as outlined in the act and

as, in fact, has been their practice since they have become the Consumer

Protection Authority, but even prior to that, when they were the consumer

services division of the ministry. Those processes are all available to anyone

dealing with this authority, as indeed they should be.

With respect to resources, clearly this will be a new area of

responsibility for the Consumer Protection Authority. They will need additional

resources to ensure that they can conduct this responsibility fairly and

adequately, and they will have the resources to do that.

This is an activity, of course, that is self-funded, so their

resources are ultimately derived from licensing fees that are derived from the

industry. In my view, that is as it should be so that this is not a burden on

taxpayers. The industry itself pays for its administration.

R. Fleming: Under the self-funded model, I'm just wondering

what the minister sees in terms of the appropriate level of staff and the costs

that need to be recovered to have, I presume, a full-time director and some

inspectors. I wonder what he sees as the staff complement that will do this job.

[K. Whittred in the chair.]

I've lost track of how large the industry is, but I know that

British Columbia has the greatest number of payday loan shopfronts per capita in

this province than in any other. Maybe it's 200 or 300 outlets. Maybe it's more.

But those determinations have to be made.

I'm wondering if the minister can assure the House that there will

be a full-time director, that there will be full-time staff and can maybe give

us an idea of how many there will be under this self-funded model.

[1100]

Hon. J. Les: In the development of this legislation,

obviously we consulted widely, including consultation with the Consumer

Protection Authority. They are confident that they can administer this

legislation with some additional staff, obviously, but with a fee structure that

would support these activities. Of course, through the administrative agreement

that the ministry has with the Consumer Protection Authority, we can ensure that

they deliver effective enforcement of this legislation on an ongoing basis.

I think the structure is there. The resources will be made

available to ensure that we can implement this legislation and enforce it

appropriately.

R. Fleming: Well, I certainly hope so. I think we've seen

with the private post-secondary education sector, for example, that an authority

was set up there, and in many people's opinion, there simply isn't the capacity

to inspect and accredit those institutions.

It all comes down to the staffing and the organization and its

ability to give oversight. It hasn't been adequate in that case. So I'll take

that as a to-be-determined response. I know the minister has an interest in

seeing it be as effective as possible. That requires resources, and that will

determine the licensing fees.

There already are some tendencies underway because of technology

and.… Perhaps there will be when we finally have some regulations on what kind

of rates can be charged to borrowers. The cost of business will be changing in

B.C. I wonder if the minister has any thoughts…. I don't think this legislation

contemplates a shift to Internet-based payday lending.

I'm not looking for comments on the bill, per se, but maybe on the

background on your way to it. I know he's consulted widely about what trend he

sees in that regard and what ability he may have to ensure that, if that were to

occur, consumers are just as adequately protected there as if they were to sign

a paper contract in a payday lending storefront location.

[ Page 8728 ]

Hon. J. Les: Actually, the member suggested that we might

be slightly off line in having this discussion, but we're actually not off line.

It is contemplated in the bill, but it's in a later

section of the bill. I don't

mind referring to it now, however.

[1105]

It's in subsection (9)(

j) where we specifically refer to

"respecting loan agreements between borrowers and payday lenders that are not

entered into in person." That contemplates a transaction entered into through

the use of the Internet. We are clearly contemplating that. We have consulted

with Internet lenders, and we intend through regulation to address that to the

maximum extent possible.

I think the member will understand and appreciate that this is

something where you actually need to proceed by regulation because that

environment changes so quickly. We need to be relatively nimble to respond to

changing circumstances. So, while that is a volatile environment to a degree, we

certainly are contemplating attempting to regulate that and, again, provide some

measure of protection for consumers in that arena as well.

R. Fleming: I wonder if the minister could just build on

that. In discussions and briefings he's no doubt had, are there some challenges

around dealing with an industry that does business this way over the Internet in

terms of out-of-province operators potentially building a customer base here,

but also in terms of the authority making findings where there are complaints,

where you have electronic documents or things that need to be reconstructed?

I wonder, if there are some things that have been highlighted or

brought to his attention, whether he could share that with the House this

morning.

Hon. J. Les: The member raises, of course, some interesting

questions. Transactions that are conducted on the Internet are, to a degree at

least, new territory when it comes to these kinds of arrangements. But what is

important to recognize is that what we're contemplating here is perhaps a lender

who is located, let's say, in the Caribbean somewhere, but the customer is

located in British Columbia. The customer is entitled to expect British Columbia

law to protect them.

[1110]

So if the lender does not abide by British Columbia legislation,

they are not entitled, then, to expect British Columbia law to help them in any

way recover their loan.

It's clear that it's going to be difficult to enforce against a

company that is located in a Third World Caribbean country, for example, where

essentially no law applies, but we still get to administer the law here in

British Columbia. We still get to protect our consumers according to British

Columbia law, and we still get to continue to deny the protection of the law for

those who choose to carry on unacceptable business practices.

R. Fleming: I think there are a lot of scenarios in that

type of a business environment where B.C. consumers could not be protected as

the act would like them to be.

Let's use the example that the minister just talked about — a

Caribbean-based payday lending operation lending to B.C. consumers. If they were

violating any number of sections of this act around disclosing the person's

rights or failing to honour repayment before the loan had become due, would it

be the case that the director could somehow take action or sanctions against

them and prevent them from making loans in B.C.?

I'm just wondering how the challenges around enforcement have been

discussed or contemplated in his ministry.

Hon. J. Les: This discussion we're in at the moment is, to

a degree at least, somewhat hypothetical. I'm happy to engage in it because it

is important to contemplate the margins of where this might go.

We have seen, through other enforcement mechanisms that government

undertakes from time to time, that we have a good degree of international

cooperation around these things. I'm thinking, for example, of telemarketers,

where we've had a lot of cooperation with American authorities and others to

bring people who engage in shady practices to justice.

Our own civil forfeiture legislation that we introduced just a

little over a year ago is already enjoying good cooperation between ourselves

and American and other Canadian jurisdictions as well.

[1115]

That will be helpful here too. But again, I return to the notion

that in this particular case, if someone makes a loan available to a British

Columbian and that person making that loan does not comply with British Columbia

legislation, they will not be able to rely on British Columbia legislation to

enforce repayment of that loan.

The recipient of the loan will in fact be able to rely on our

legislation to limit — in some cases, seriously limit — the amount of money that

might be repayable. For example, there will be provisions that limit the amount

of money to be repaid to the principal only, with no interest whatsoever.

That is how I think British Columbians are entitled to rely on

British Columbia law. Lenders who do not comply with British Columbia law,

relying on the fact that they are remotely located through the Internet, will

not be entitled to rely on British Columbia law to help them engage in their

illegal schemes.

R. Fleming: I just want to ask the minister about fines and

penalties, and what he would see as an appropriate maximum penalty for somebody

who has had a number of complaints that were then found to show a systematic

pattern of doing business against the main intent of the act and the regulations

around fees.

Hon. J. Les: In terms of enforcing the act, of course, the

Consumer Protection Authority will have a variety of tools available to it. I

would direct the member's attention to

part 10 of the Business Practices and

Consumer Protection Act. There's quite an array of sanctions and other penalties

that the director will be able to utilize.

[ Page 8729 ]

Perhaps slightly more specifically in terms of compliance and

enforcement, there are a number of mechanisms that are available to the

authority that I'd just like to list.

First of all, they can refuse, obviously, to issue a licence. They

can place conditions on a licence, or they can rescind a licence.

In the process of coming to conclusions as to whether a licence

should be rescinded, for example, they can investigate complaints. They can

enter onto a business. They can take copies of documents. They can hear

witnesses.

They can make compliance orders, which in some cases can lead to

freezing property or obtaining injunctions, and they can impose progressive

administrative penalties up to a maximum of $50,000. I think that is a

significant deterrent.

Ultimately, they can also recommend that charges be laid in

criminal court.

R. Fleming: I thank the minister for the response. What we

hope we don't see is a reluctance, where there are clear violations, to enforce

those kinds of penalties.

I note, for example, that the Degree Authorization Act allows up

to $100,000 fine per offence. There have been many offences clearly documented

in written findings, and there has never been a single fine levied by the

government.

[1120]

I hope it's not the case, where there are payday lenders quite

egregiously violating the law, carrying on as if business is as usual and this

act never existed, that the government won't be afraid to use those powers at

its disposal.

I wanted to move on to a small subsection in this part of the act

where it discusses the application of

part 6.1 to savings institutions. We

talked a few minutes ago about the Financial Institutions Commission and why the

minister has chosen the Business Practices and Consumer Protection Authority to

be regulating the payday lending industry. I just wonder if this clause, that

part of the act doesn't apply to savings institutions…. It refers to the various

borrowers' rights listed above it, the remedies that are available and what the

lender must provide to the borrower in advance of that loan contract.

I'm just wondering what the thinking is behind not having this

apply to savings institutions. Is it the case that credit unions are already

regulated in another way where they have to disclose virtually all of these

things when they do a loan product similar to this? I'm just wondering if the

minister could enlighten me on that.

Hon. J. Les: I appreciate the question. What we did not

want to do in this legislation is inadvertently capture other institutions that

in the normal course of their business might provide credit that looked like a

payday loan. What this legislation contemplates is the borrowing of money in

amounts of no more than $1,500 and for a period of time no longer than 62 days.

If a credit union were to make a loan of a similar description available to one

of its clients in the normal course of doing business, that would then not

necessarily make it, at all, a payday loan institution — obviously not. So we

wanted to be sure that they were not inadvertently caught up in that by virtue

of the definition of a payday loan.

However, if a financial institution such as a credit union did

actually expressly want to get into the payday loan business, they would have to

be licensed under this legislation.

R. Fleming: I thank the minister for the response. I was

wondering about that, and I think that covers it. Of course, most people who

take payday loans would probably prefer to have a generous overdraft on their

accounts but aren't given one. So I think there probably are some alternatives.

Now that there is a legal framework, or will be one, they may be interested in

creating products that are between an overdraft and a payday loan of some kind.

I wanted to ask the minister about the

section that gives details

about what rights must be known to the borrower and what must be contained on

the contract document around addresses, names of businesses, signatures and all

of that. There isn't any provision that the form itself, which is probably

stapled to the receipt that the borrower takes….

[1125]

There isn't any provision that there be contact information for

the Business Practices and Consumer Protection Authority itself. I think it

might be a really good opportunity for…. While you're regulating what the form

must have at a minimum and what the rights of the borrower are, it might

actually be good to direct them to the place where they can make an inquiry or

even lodge a complaint, if they feel they're being wronged.

I wonder if the minister would take that under advisement and

include it in this section.

Hon. J. Les: I appreciate the comments of the member in

that regard. I think we could usefully include that information on the

appropriate documentation.

The legislation actually gives us the ability to require that to

be done under

section 112.06(2)(t), where it says we can require "any other

term, information or statement that may be prescribed under

section 197.1(1)(i)."

The ability to do that is there. I think that is a reasonable

suggestion that we will take into consideration.

R. Fleming: I think that's a good assurance. I don't need

to propose an amendment to make sure that's done. It clearly is in that

subsection (t). Obviously, one of the things that this authority is going to

work closely with the industry on is exactly coming to a common form the

industry must use. I'm sure that will get done when that work is arrived at by

the authority.

I did want to propose an amendment in this section, however, to

subsection 112.05(1).

[To amend

section 112.05(1) (contained within

section 4) by deleting

next day and substituting second day .]

[ Page 8730 ]

On the amendment.

R. Fleming: If I may, I will motivate briefly on this. I think one of the

things that the provinces that have been sitting at the table working with the

federal government to bring some order and ability to regulate this industry….

There was always some hesitation that we would have ten responses to the

industry and that there would be a patchwork around the country. Some provinces

have not yet arrived at legislation like we're debating today, and some already

have.

Here we are. This is quite a departure from Manitoba, which is

further ahead than British Columbia, where they have included 48 hours as the

provision in the related

section to this. I think B.C. should also follow

Manitoba, because as all the western Canadian provinces and provinces in the

rest of Canada arrive at where B.C. is — and those that have gone before us —

commonality does have its advantages.

The additional reason is that, quite simply, when we talked in

second reading, we talked about who uses payday loans, what vulnerabilities they

have as consumers. This is a special group of British Columbians who do not have

a recourse or ability to use other credit products that provide much, much

better terms for them.

In some cases, there are circumstances that those individuals find

themselves in, where they're seeking payday loans that are not desirable. There

are some sad circumstances in some cases, and I think we should, as Manitoba

has, afford an additional day of sober second thought to allow that borrower to

cancel and fully refund the lender in our legislation.

I would propose that as an amendment.

[1130]

Hon. J. Les: Well, speaking against the amendment, let me

just make a few observations. The member opposite has held up Manitoba as being

the national standard. As a matter of fact, they are the outlier. The provinces

of Saskatchewan and Nova Scotia, for example, the other two provinces that have

already established these provisions, have the same provision as British

Columbia has in its proposed legislation. I think it's important to note that.

If members will look at the clause the way it is written, yes, we

do set the standard that the loan may be cancelled "at any time before the end

of the next day," but we go on to say "or before the end of any longer period

that may be prescribed in the regulations."

What we have done is go with the majority of other provinces

that have already established this legislative requirement, but we have also

given ourselves the flexibility to change it by regulation should practice show

that that is advisable.

I'm not saying flat out to the member opposite that we may never

need to change it, but what I am saying is that if experience shows that we

should, we will have the ability to do that.

So in that context, I suggest the amendment is not necessary, and

therefore I'm opposed to it.

Amendment negatived on division.

R. Fleming: I'd like to just ask the Solicitor General

about the regulations that will come into effect. We've discussed this morning

some of the major concerns and what would be desired to make a fair and balanced

environment for this industry to operate in and for the consumer protections

that we want to have in place for the borrowers.

I mean, in some cases we are going into uncharted territory here.

We will want to review things. He just said that he voted against the higher

standard for the borrower's right to repay without penalty the loan by an extra

day but has suggested that there is a mechanism, if that's warranted, for him to

suggest that that be done later.

I note that Manitoba has a provision to review the regulations

within three years. Obviously, under their system, as I understand it — under

the utility commission that is charged with the responsibility there — that

would probably mean a new round of hearings to hear from all the stakeholders

and hear from the industry, the public, etc.

[1135]

I'm just wondering if there's any mechanism by which the Solicitor

General can assure us that we regularly hear updates on how this legislation is

performing — that there is feedback, that the authority is publishing its

findings, giving British Columbians an indication and an assurance that the act

is working as it was intended — and if the Solicitor General could just tell

this House how that might be done.

Hon. J. Les: I appreciate the member's interest in the

question of accountability and how the legislation is going to work and what

mechanisms might be available to adjust the legislation if that's necessary.

There is, I think, a significant amount of flexibility built into this

legislation so that as market conditions change or as business practices change,

we should be able to adjust to those changing conditions on an ongoing basis.

The Business Practices and Consumer Protection Authority is

required to report to government on an annual basis, and they obviously will be

required as part of that report to comment on how they are doing with respect to

the enforcement of this legislation.

Obviously, government always has its ear to the ground and hears

constantly from people who are involved in these and other transactions. If

there is a shortcoming in consumer protection, that is one area where we hear

from the public with great regularity. I suspect the member opposite also will

play a role in terms of defining any shortcomings that might become apparent as

this legislation is applied.

I think we have a myriad mechanisms in place to monitor the

success of the legislation and compliance with its provisions. As I've said, the

legislation and the associated regulations are sufficiently flexible in terms of

the ability to change them that I think we should be able to respond

successfully to the challenges that this industry might confront us with.

Section 4 as amended approved.

[ Page 8731 ]

Sections 5 to 12 inclusive approved.

Title approved.

Hon. J. Les: I move that the committee rise and report the

bill complete with amendment.

Motion approved.

The committee rose at 11:40 a.m.

The House resumed; Mr. Speaker in the chair.

Reporting of Bills

BUSINESS PRACTICES AND CONSUMER

PROTECTION (PAYDAY LOANS)

AMENDMENT ACT, 2007

Bill 27, Business Practices and Consumer Protection (Payday Loans)

Amendment Act, 2007, reported complete with amendment.

Mr. Speaker: When shall the bill be read as reported?

Hon. J. Les: With leave of the House, now.

Leave granted.

Third Reading of Bills

BUSINESS PRACTICES AND CONSUMER

PROTECTION (PAYDAY LOANS)

AMENDMENT ACT, 2007

Bill 27, Business Practices and Consumer Protection (Payday Loans)

Amendment Act, 2007, read a third time and passed.

Hon. G. Abbott: I call committee stage debate on Bill 28,

intituled Securities Amendment Act, 2007.

Committee of the Whole House

SECURITIES AMENDMENT ACT, 2007

The House in Committee of the Whole (Section

B) on Bill 28; K.

Whittred in the chair.

The committee met at 11:43 a.m.

section 1.

L. Krog: This

section changes the definition of both

"forward-looking information" and "material fact." I'm just wondering: how does

this harmonize with other provinces? Is it exactly the same definition as used

in other provinces, and how many provinces are we talking about?

Hon. W. Oppal: This definition coincides with and

harmonizes with all other jurisdictions. I should state that the underlying

philosophical basis of this legislation is to harmonize with all other

jurisdictions. We, in fact, have entered into a memorandum of understanding with

all jurisdictions with the exception of Ontario to harmonize our legislation. So

our

definitions will coincide with other jurisdictions.

L. Krog: The definition, as it relates to material fact,

changes from, I gather, a fact that significantly affects to a fact that would

"reasonably be expected to have a significant effect." I take it, then, that

Ontario is not on board. In that sense is it simply because they haven't got

around to amending their legislation, or in fact are we going to end up with

nine jurisdictions, arguably, across the country, provincially speaking, and one

odd person out, which happens to be the most substantial province in the

dominion?

[1145]

Hon. W. Oppal: Ontario is on board as far as this

definition is concerned. When I said that Ontario was not on board, I meant that

they were not on board as far as the memorandum of understanding is concerned.

The passport process and the harmonization process will be integral parts of

this bill.

Sections 1 to 3 inclusive approved.

section 4.

L. Krog: This section, as I understand it, will allow a

member of the commission who conducted the investigation to create a report and

sit in the hearing as long as they have consent from the parties involved, but

otherwise they would not be entitled to do so.

I gather in the past that the commission, in a sense, could act

both as prosecutor and judge. I'm wondering if that is, in fact, the effect of

this

section so that if you act as prosecutor, so to speak, or have done the

investigation, you can now sit on the panel as long as the parties consent.

Hon. W. Oppal: What this

section does is it permits a

commissioner to sit on a hearing even though that particular commissioner has on

an earlier occasion issued a freeze order on the assets or whatever else may be

related to the transaction. It speeds up the process so that the same

commissioner could deal with the matter.

The Chair: Attorney General, I believe your mike was not

on.

Hon. W. Oppal: This section,

section 7(4), permits a

commissioner to sit on a hearing even though that particular commissioner has

made an order or has commenced an investigation in relation to the same matter

as long as the parties consent. The intent of this is to facilitate the process.

[ Page 8732 ]

L. Krog: It has certainly been suggested that there should

be an entirely separate function to the investigative, or prosecutorial,

function and the hearing function. I'm just wondering: does this

section and the

change proposed align us with other jurisdictions in Canada, or is this simply

an improvement for British Columbia's practice?

Hon. W. Oppal: I can say that the province of Ontario has

similar legislation. I would expect that other provinces would have a similar

provision, although it isn't something that I can say with precise accuracy. As

I said a moment ago, the purpose here is to harmonize our laws with other

provinces.

Sections 4 to 7 inclusive approved.

section 8.

L. Krog: Again, my understanding is that this

section is

going to harmonize with other Canadian jurisdictions, and I'm just wondering if

the Attorney General can outline: does that include Ontario? Does it not include

Ontario? What other jurisdictions does it include?

[1150]

Hon. W. Oppal: This is a part of the harmonization process.

The amendment will come into effect at the same time as a new national

registration rule which was published for comment in February of this year.

Sections 8 to 11 inclusive approved.

section 12.

L. Krog: I'm just wondering if the Attorney General can

explain the effect of

section 12 in terms of its expansion of prohibitions or

regulation.

Hon. W. Oppal: What this

section does is it repeals and

replaces

section 55. It broadens a prohibition against representing that the

commission has approved a registrant, a security or an issuer by an issuer's

disclosure to the list of prohibitions. It's to prevent a prospective wrongdoer

from representing to an investor that the commission has given its endorsement

or approval when it registers a person and issues a receipt for a prospectus or

reviews an issuer's disclosure.

The reason for that is that the commission routinely reviews

continuous disclosure material. The prohibition would cover this aspect of its

regulatory activities. This amendment provision is similar to a provision

contained in the 2004 act.

L. Krog: Just so I am clear in my understanding of what

this actually does. Essentially, it says: "Look, you can't go around saying the

commission's given us the stamp of approval." But what exactly does the

commission do, then, apart from taking the name of an individual? Is there

anything other than that?

Hon. W. Oppal: I think that's a good

summary. That's a

concise

summary of what this

section states.

L. Krog: Just so I'm clear, then. I take it that if one is

a person who would be making these kinds of representations on their behalf, all

you've got to do is register.

Is there any investigation in regards to this person? Is there any

prohibition? If there is no prohibition, for instance, and yet the commission in

theory could investigate fairly easily and determine that a person was not a

person who should be engaged in this kind of business at all, is there any way

of stopping that?

Hon. W. Oppal: What this says is that the import of this is

that by virtue of registering something doesn't mean that the commission is

approving it. That's really what it is.

Section 12 approved.

section 13.

L. Krog: I'm wondering if the Attorney General can explain

the effect of

section 13, which replaces

section 57. How does it improve, and

again, how does it jive with other jurisdictions in Canada?

Hon. W. Oppal: This repeals and replaces

section 57. The

current

section 57 prohibits market manipulation and fraud within the province.

The current

section 57.1 prohibits market manipulation outside the province by

persons situated in the province.

[1155]

This provision or these provisions were adopted because of a

decision of the Supreme Court which found the former single provision ultra

vires . The decision was later overturned, so it's no longer necessary to

separate the two provisions.

The new

section does not make any substantive changes and is

adapted from

section 27 of the 2004 act. It's harmonized with similar provisions

in Alberta and Ontario.

L. Krog: Noting the hour, I move the committee rise, report

progress and ask leave to sit again.

Motion approved.

The committee rose at 11:56 a.m.

The House resumed; Mr. Speaker in the chair.

Committee of the Whole (Section B), having reported progress, was

granted leave to sit again.

Hon. G. Abbott moved adjournment of the House.

Motion approved.

Mr. Speaker: This House stands adjourned until 1:30 this

afternoon.

The House adjourned at 11:57 a.m.

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